Australian Dollar, AUD/USD, US Dollar, Unemployment, CPI, RBA, China – Issues
- of australian dollar Collapsed after today’s employment statistics
- The RBA meeting has taken on a new dimension inflation in that sight
- The market is focused on next week’s CPI.Do you drive? Australian dollar/US dollar direction?
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The Australian dollar fell today after the latest employment figures from the Australian Bureau of Statistics (ABS) were mixed. Looking at the numbers, it already looked vulnerable.
The unemployment rate in September was 3.6%, lower than the prior estimate of 3.7%. Australia added 67,000 jobs in the month, which was lower than the expected addition of 20,000 and the previous 64,900.
Unfortunately, while 39.9,000 full-time jobs were lost, 46.5,000 part-time roles were added, and the participation rate fell from 67.0% to 66.7%, leading to a decline in the headline unemployment rate. contributed to the decline.
There have been some notable developments since the RBA left interest rates unchanged at 4.10% earlier this month.
It began last Wednesday with Reserve Bank of Australia (RBA) Assistant Governor Chris Kent.
While highlighting issues surrounding the time lag of monetary policy spillovers, he continued: “Further tightening may be needed to ensure that inflation is back on target, even though it remains too high.”
And earlier this week, RBA meeting minutes were released showing the board was much closer to raising interest rates than its monetary policy statement at the time.
Specifically, the minutes state that “the Board has little room to allow inflation to return to target slower than currently expected.” The need for further rate hikes will therefore depend on future data and how they change the economic outlook and risk assessments as they evolve. ”
Compounding the hawkish trend, RBA Governor Michelle Bullock, speaking at yesterday’s summit, pointed to the problem of a cascade of external events that cause inflation.
she said: “The problem is that we keep seeing one shock after another. The longer inflation stays high, even if it’s a supply shock, the more people adjust their thinking.”
Before adding further: “The more people adjust their inflation expectations, the more inflation is likely to become entrenched. That’s the challenge.”
All of this means next Wednesday’s Q3 Australian CPI data will focus on the Australian dollar.
A Bloomberg survey of economists now expects headline inflation to be 5.2% year-on-year (previously 6.0%), well above the RBA-mandated target of 2-3%.
Large fluctuations from expectations could trigger a bout of volatility in AUD/USD.
In the short term, rising US Treasury yields are supporting the US dollar, and if yields continue to rise, AUD/USD could test levels.
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AUD/USD price reaction to employment data
Chart created with TradingView
Latest technical analysis information for AUD/USD
AUD/USD has rebounded from a low of 0.6286 earlier this week, and a double dip is possible if the price does not break below that level.
Overall, we are still in a downtrend channel and the bearish momentum may be intact for now.
A bearish triple moving average (TMA) formation requires price to fall below the short-term simple moving average (SMA), the latter below the medium-term SMA, and the medium-term SMA to fall below the long-term SMA. . All SMAs must also have negative slopes.
Looking at the combination of the 21-day, 34-day, 55-day, 100-day, and 200-day SMAs, the criteria for a bearish TMA are met and could signal that bearish momentum is evolving. there is.
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Last Wednesday’s high of 0.6445 coincides with the 55-day simple moving average (SMA), and that level could provide resistance ahead of previous peaks in the 0.6500-0.6510 range.
Further up, the 0.6600 to 0.6620 area could become another resistance zone with some breakpoints and previous highs.
On the downside, support is likely near the previous lows of 0.6286, 0.6272, and 0.6170.
The latter may also find support at the 161.8% Fibonacci extension level of 0.6186.
AUD/USD daily chart
Chart created with TradingView
— Written by Daniel McCarthy, DailyFX.com Strategist
Please contact Daniel. @DanMcCathyFX on Twitter
